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News & Views

Provided by the Investment Professionals of Frost Investment Advisors | May 09 , 2022

“Softish Landing”, Employment Data Mixed, USD Rising

Fed Hopes Raising Interest Rates and Balance Sheet Runoff can Cool Inflation and Avoid Recession

Last week, the Federal Reserve raised interest rates 50 basis points as expected. During the post meeting Q&A, when Chairman Jerome Powell was questioned about the likelihood of avoiding a recession, he quipped “I think we have a good chance to have a soft or softish landing.” Powell’s choice of words shows that the Fed is making an effort to manage the markets’ expectations in order to tighten policy in an orderly manner without adding to already heightened fears of a recession. Overall, his tone remains relatively optimistic, citing the ongoing strength of the economy, labor and excess savings of households.

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